Vermont’s $195M rural health funding fully committed

The biggest share of the money, more than $88 million, went to regionalization work.

Vermont has now placed all $195 million in federal Rural Health Transformation money it received last December under contract, reaching the deadline after a 10-month rollout that produced more than 200 separate agreements and drew hundreds of applications. With the first-year dollars assigned, state officials are shifting from planning to execution as the five-year program enters its next phase.

The effort is being led by Jill Mazza Olson, the state’s Medicaid and health systems director, who said the bulk of the money is going directly to providers and health systems rather than being absorbed by consultants and analysts. She said the funding is meant to support a broader overhaul of how rural care is delivered, not to replace the redesign work that hospitals still need to do on their own.

Vermont hospitals are under pressure from several directions. They are trying to keep prices in check while preserving financial stability, and they are also bracing for lower Medicaid payments tied to changes in the federal law that created the rural health fund. State officials say that combination makes it necessary to rethink how specialty care is organized and how patients in rural areas get access to services.

The Agency of Human Services sorted the projects into four main tracks: workforce development, primary care, expanded care settings and physical infrastructure improvements, along with a large regionalization effort. Officials view those categories as interconnected parts of a single strategy to consolidate some services and make them easier to reach.

The biggest share of the money, more than $88 million, went to regionalization work. That includes over $32.3 million for upgrades at clinics, rehabilitation centers and nearly all hospitals in the state. It also covers expansions in urgent care options for mental health and substance use treatment, plus mobile primary care units.

Among the larger individual awards, Northwestern Medical Center in St. Albans received $2 million to help transfer obstetrics services to Maitri Health Care, an independent contractor. Brattleboro Memorial Hospital also received support under the same category, with money aimed at developing a plan to keep birthing services in Windham County.

Some of the funds are also going toward outside expertise. McKinsey received $5.1 million for analytics and support, one of the largest single awards made by the state.

Another $34.2 million was set aside for shared services designed to improve coordination between hospitals and expand access to specialists in rural communities. That funding includes more than $10 million for telehealth tools and remote patient monitoring. The University of Vermont Health received almost $3 million to improve transfers between facilities, and a group of Vermont hospitals received money to work toward a unified electronic medical record system. In addition, 25 smaller clinics and health facilities were awarded a combined $5 million to use AI for note transcription, a step providers say can reduce paperwork.

More than $40 million is being directed to primary care, including data work, recovery housing for people with substance use disorders, and programs that blend mental health support, community services and team-based care.

The state also committed $26.6 million to workforce efforts. Although no money went to schools this year, officials said that could change later. The funding does include training, tuition help and mentorship. One award of $571,900 is supporting the Maple Mountain Consortium Family Medicine Residency Program, which is intended to train doctors in Vermont’s rural primary care settings.

Another major award, $8 million, went to Kinney Drugs to expand its test-to-treat model so pharmacists can test for and treat certain common illnesses such as flu and strep throat. That broader role was approved in state law this year.

State officials are now tracking the first year’s commitments while waiting for confirmation on year two. The Agency of Human Services had expected an update from the Centers for Medicare and Medicaid Services by Oct. 30, but a spokesperson said Monday that the agency has not yet received word on the next award.